Finding the right home loan can save you thousands of dollars over time. Even a small difference in interest rate or fees can have a significant impact on your long-term finances.

Key loan elements

When comparing loans, don't just look at the advertised interest rate.

Here are the two essential features to compare:

Interest rate

• Advertised annual rate

• Current market average is around 6.21%

• Consider both fixed and variable options

• Look for rates at least 0.5% below average

Comparison rate

• Includes interest rate plus most fees

• Gives you the true cost of the loan

• Usually higher than the advertised rate

• Best tool for comparing different loans

Fees to consider

Watch out for these common charges:

• Application/establishment fees

• Monthly service fees

• Annual package fees

• Early repayment fees

• Offset account fees

• Redraw facility charges

Loan features worth comparing

Not all loans offer the same features, and each additional feature might increase your costs. Consider which of these you really need:

Considered essential

• Extra repayment options

• Online account management

• Monthly statements

• Customer support

Considered nice-to-have

• Offset accounts

• Redraw facilities

• Branch access

• Mobile app

• Payment frequency options

How to compare effectively

Follow these steps when comparing loans:

1. Get quotes from at least two different lenders

2. Compare comparison rates, not just advertised rates

3. Calculate total costs over the loan term

4. Check all applicable fees

5. Review available features

6. Consider future flexibility needs

Remember: a loan with more features isn't necessarily better.

Choose features you'll actually use and avoid paying for ones you won't need.

Using comparison tools

While comparison websites can be helpful, remember that:

• They may not show all available loans

• Some lenders may pay for prominent placement

• Featured loans aren't necessarily the best deals

• Always verify information directly with lenders

Making your final decision

Hint: this is not a coin toss.

When you've narrowed down your options, ask each lender:

• Is this their best available rate?

• Can they match or beat a competitor's offer?

• Are there any unadvertised special offers?

• What are their loan processing timeframes?

Choose a loan that balances competitive rates, reasonable fees, and the features you'll actually use.

Don't be afraid to negotiate – lenders often have room to move on rates and fees for well-qualified borrowers.

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